Question

At a volume of 10,000 units, Company P incurs $30,000 in factory overhead costs, including $10,000 in fixed costs. Assuming that this activity is within the relevant range, if volume increases to 12,000 units, Company P would expect to incur total factory overhead costs of:

Answer 1

$34,000

Step-by-step explanation:

The total variable factory overhead cost = Total cost - the fixed cost

= $30,000 - $10,000

= $20,000

The variable overhead cost of 12,000 units

= $20,000 × 12,000/10,000

=$24,000

Total factory overhead = $10,000 + $24,000 = $34,000